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You can contact the author (Teguh Hidayat) by email, teguh.idx@gmail.com. The author live in Jakarta, Indonesia.

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Berlian Laju Tanker

Lately, the market is made to be worry by the decline of one of
the exceptional shares in its sector. Berlian
Laju Tanker (BLTA) is undoubtedly the biggest shippingcompany in
Indonesia. So, it doesn’t feel ‘right’ if you don’t collect the company’s
stock. Moreover, on the first quarter 2010, BLTA succeeded to record net income
of US$25 million, from previous loss of US$73 million. But why did the stock
continued to fall? And why in the last month (since early June), the decrease
became more and more drastic? When this article was written, BLTA slumped in
position of 240, after previously in stable position of 340.

If we look back, BLTA was stable on range of 600-700
in mid 2009 until May 2010, before then fell into position of 330 (in average).
Unfortunately, unlike the other bluchips’ stocks that rose immediately at the time (in May 2010, the JCI was down
significantly), BLTA was still on that
position, and currently lower down. What’s wrong?

One thing you need to remember as the investor is: The
increase in net income/profit does not necessary mean an increase in the company’s performance
as a whole. Yup, if the financial statement could be analyzed in overall,
BLTA’s financial performance wasn’t good enough for its stock to be collected,
even for
speculation or short-term
trading. Based on the financial
statement in first quarter 2010 (BLTA hasn’t released its financial statement
of the first half 2010), BLTA has assets worth of US$2.7 billion, where the
US$2.0 or 73.7% of it was debt. That amount increased 18.3% than in the same
period last year. On the other hand, the equity declined 4.1%.

Aware that they have pretty great debts with some part of it will be due in less than a year, BLTA’s management launched
some strategies to get fresh funds, through right issue and issuing bonds. With
the cash position that only US$96 million, surely there’s no other option for
the company to pay the debt besides through issuing new stocks or looking for new debt.

Lately, the issuing bonds strategy was cancelled because it seemed
that the company has difficulties to find investors who would buy the bonds.
Then, the company do the
right issue worth Rp1.2 trillion, at a price of Rp220 per share (so there are
5.6 billion pieces of new shares). Here’s the
important point: The standby buyer of the right issue was just the company owning the majority
shares of the company, which was PT TunggalAdhi Baskara (TAB). This
company (TAB) only capable
to bought 1.1 billion of shares from the
newly issued shares amounted to 5.6 billion. Then who bought the rest of 4.5
billion? It was bought by Danatama Makmur Sekuritas, and some of the BLTA’s
creditors.

Have you remembered when Bakrie Sumatra Plantations (UNSP) found
out to not having cash funds amounted to Rp3.5 trillion deposited in Bank
Capital just as they wrote on their financial statement? The funds was said to
be generated from the right issue process of UNSP amounted to Rp5.0 trillion.
Who was the underwriter of the right issue of UNSP at that time? It was Danatama Makmur
Sekuritas.

The involvement of Danatama in the UNSP’s right issue process,
which lately doubted whether UNSP really achieved Rp5.0 trillion from the right
issue or not (because the airing case of fictive deposit in Bank Capital)
and its involvement in BLTA’s right issue process, made lots of market
participants wonder: Perhaps the proceeds from the right issue would not reach Rp1.2
trillion? Because if you look at the performance record of BLTA that continued to fall since the crisis hit on 2008 and no sign of
it to rise again, then most likely the stake holder of BLTA would resist to
take the allotment from the right issue, and prefer to go out.

On the first quarter 2010, BLTA recorded net income of US$25
million. However, the operating profit declined 38.3% from US$42 million to
US$24 million, so that the real BLTA’s performance still hasn’t improved as it
seemed. This is what had been examined by the investors.

The right issue had been done throughout July, with the date of
allotment was on 29 July. Well, although BLTA still gained funds amounted to
Rp1.2 trillion from the right issue, that amount was still insufficient to pay
the short-term debt, which total of US$395 million or about Rp3.5 trillion. So,
even if this right issue strategy worked, BLTA’s management still has to find
other funding alternatives.

That is why, many stake holder of BLTA still unable to see the
bright prospect of this company, so they really prefer to go out since last
month. And consequently, the stock price continued to fall, although it already
passed the dilution limit.

By the way, that right issue process with 1:1 ratio has made
BLTA’s stocks diluted 50%. If compared to the stock price on May, which was in
the range of 650 (BLTA announced its right issue on 26 May), then BLTA should
only be decline to position of 325 (in average) after diluted. But why did the
stock continue dropped to lower than 325 and now on the position of 240? Read again the explanation above.

Then, whether in the future BLTA would be able to strengthen
again? It seems difficult because so far, there’s still no factor that can make
BLTA strengthen back, except for speculation factor, as usual.

If since beginning you have known who would be the underwriter of
BLTA’s right issue, then you were supposed to go out of BLTA since the
beginning of last June.